Chalk one up for the little guy. In Peabody v. Time Warner Cable, Inc. _____ Cal.4th ___ (July 14, 2014), the Supreme Court of California directly addressed “whether an employer may attribute commission wages paid in one pay period to other pay periods in order to satisfy California’s compensation requirements.” (Spoiler alert: the answer is no.)
Between July 2008 and May 2009, Plaintiff Susan Peabody (“Ms. Peabody”) was a commissioned account executive for Time Warner Cable (“Time Warner”) selling advertising on Time Warner’s television channels. Ms. Peabody regularly worked 45-hour weeks for which she was never paid overtime. Excluding commissions, she earned less than the minimum wage during weeks in which she worked more than 48 hours. As a result of Time Warner’s implementation of a new compensation plan in March 2009, she was not paid all commissions owed on her January and February 2009 sales and thus did not meet the pay requirements for a “commissioned employee” exemption during these periods.
Time Warner argued that it should be able to allocate Ms. Peabody’s commissions over the course of a month. (Side note: Isn’t that just so classically Time Warner Cable? “Please be prepared to have your commissions allocated between the days of the 1st and the 31st of this month.”). The Supreme Court did not buy this argument, citing California Labor Code section 204(a)’s clear directives that all wages, including commissions, must be paid “no less frequently than semimonthly.”
Alternatively, Time Warner argued that it should be able to allocate employee commissions according to the pay periods in which the commissions were earned not paid. The Supreme Court rejected this argument as well, choosing to narrowly construe the commission exemption language against the employer in order to protect the employee.
Now if only they would do something about those appointment schedules.
The entire opinion can be found here: